Mohamed Rismy

Number: M00476686

Student

International Operation
Management
(2nd course work)

Module No: MGT 3220

Module lecturer: Mr. Asanka Marapana
Module Leader: Oktay Ozdenli
Student name: Mohamed Rismy
Student ID: M00476686
Campus: ICBT Kandy Campus
University: Middlesex University

Executive summary
This report contains how to implement the suggestion from the first course work and this is
continuation of the first report.
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Mohamed Rismy
Number: M00476686

Student

In this report I explain the effects of absorptive capacity using relevant examples and also
discussed the technology and knowledge transfer, it discuss the outsourcing in that what need to
be outsource and reason to outsource.
Finally it discuss the supply chain strategy in that I suggest what mode will fits to Hameedia and
also through value chain it explain the internalization process and configuration and
coordination.
There is lots advantages going international so that we can increase our market share and profit.

Introduction
In my first course work I discussed advantages of going international and also the report consist
suitable country for Hameedia to enter the international market and suitable mode to start
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Mohamed Rismy
Number: M00476686

Student

business. According to that I have chosen Maldives for the internalization and also I mention in
Maldives I going to put a sales subsidiary. I clearly discussed the reason why Hameedia select
Maldives and going with sales subsidiary.
In this report I going to explain how to manage or develop the international structure and the
future plans.

Effects of absorptive capacity

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Mohamed Rismy
Number: M00476686

Student

Absorptive capacity, the capability of an organization to identify the value of new, external
information, assimilate it, and apply it to commercial ends is critical to its new capabilities. Its a
function of the organizations prior knowledge.
A firms absorptive capacity depends on individual capacities. It depends on transfers of
knowledge across environmental boundaries and across sub units.

Social context
Institutional distance between
home & recipient

Implementation
of practice at
recipient unit.

Regulatory
Cognitive
Normative

Internalization of
practice at recipient
unit.

Organizational context

Organizational culture of
recipient unit

Favorability for learning

and change
Compatibility with
practice

Commitment to
practice
Satisfaction with
practice
Psychological
ownership of

Relational context
Attitudes of transfer coalition

The factors that determine

implementation

and

Commitment to parent
Identify with parent
Trust in parent

Dependence on parent
company

the

effective

internalization

of

an

organizational practice is divided into three context: social, organizational and relational which is
analyzed at three levels: country, organizational and individual.
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Mohamed Rismy
Number: M00476686

Student

According to the Hameedia,

The social embeddedness this is very similar to psychic distance. This is reflected as the
cultural differences between host and domestic country. The social context is defined through
three construct by kostova (1999). These are,
1. Cognitive
2. Normative
3. Regulatory
According to this Sri Lanka and Maldives cultures are not that much different. I explained this
clearly through examples from my first course work. So that this might helpful to learn the host
market through that can develop the business.
The organizational embeddedness is defined under two constructs favorability of learning and
change, and compatibility with practice
Favorability of learning refers to the recipient organizations attitude towards change. So
Hameedia will transfer the technology host it will give the good result to organization.
The relational embeddedness is based on the cooperative relationship. It will contain host
market want to react according to the domestic decision. Maldives Hameedia sales outlet will
perform under the guideline of head office situated in Sri Lanka. This will happen through
technology transfer.

What need to be transferred to host country?

To answer this question according to the Hameedia context they cannot transfer their production
to host country because they open their sales outlets in Maldives they not going to open a
production plant there, so appropriate decision is production should in domestic country reason
given by first course work.

Technology
Here Hameedia have to transfer their technology to host country. Through technology only they
can evaluate the performance of host market. Through technology they need to observe the outlet
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Mohamed Rismy
Number: M00476686

Student

performance and this is the possible way to develop the business in host rather going there and
look after the business.
Organizational practices
In here they no need to transfer all their practices but they have to transfer certain things such as
Hameedia has a better customer care in domestic country this give the competitive edge for the
Hameedia, their outlet structure, and management style so they have to bring these practices to
host country.
Hameedia has good centralized decision making style in domestic market, so they can look after
their host market in this style because they opened only one sales unit in host, so they can
manage help of new technology. This will help full to develop the business in host and also right
decision will take right person.
To transfer Hameedia have to use new technology. They can communicate with host market
through SKYPE, VIBER and WHATSAPP. They can evaluate their outlet performance through
CCTV camera system. To transfer their finishing goods they can use airbuses and ships.

Outsourcing
Core competencies
Core competencies is the set of activities, skills, or advantages that distinguishes a company for
its competitor
Core competencies of Hameedia

Standard product
Unique pricing strategy
Customer care service
After sales service
Marketing techniques
New technology
On time supply
Experience in the fashion industry
Management

These are the competencies that give competitive edge to Hameedia in the domestic market.
BABAM

Mohamed Rismy
Number: M00476686

Student

Outsourcing flow chart

Does it contribute
significantly to customers
perceived value added?

No
Consider
outsourci
ng

Does it directly support a

critical value added skill
set

Ye

Ye

Difficult to
replicate

Do not
outsource

No
Consider outsourcing
proceed with caution:
outsourcing must be
transparent to
customer

Ye
Difficult to replicate

Ye
Do not out source unless
provider can ensure
same/better performance
current.

Out sourcing trends

There are four major outsourcing trends such as,
Contract manufacturing: a third party makes an end product or major component under another
companys brands
Third-party logistics: using a supplier to provide some combination of logistic activities
Offshoring: outsourcing to a different country
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Mohamed Rismy
Number: M00476686

Student

Business process outsourcing: outsource support functions such as: HR, Payroll, Logistics, etc.

According to Hammedia they follows business process outsourcing. Because they need some
support functions to run their business this will be the effective tool to Hameedia, so Hameedia
will outsource logistic department through that they can store their goods in safe place and also
can deliver their product on time to customer maintain and transport cost are law. And Hameedia
will outsource marketing team because host country people now their country culture and taste of
the people so they can easily reach customer that will help to increase the market share and
profit.
Benefits of outsourcing
By outsourcing non-strategic process, an organization can focus its attention on those things it
does to satisfy customers.

Cost savings
Capital conservation
Performance improvement
Access to law cost labor or resources
Benefit from outside expertise.

Outsource risks and mitigation strategy

Risks

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Safe guard

Mohamed Rismy
Number: M00476686

Capacity or shortage

Student

Identifying alternative sources for key

parts,

keeping

distributors

in

mind

use

the

that

all

same

manufacturers, so shortage is difficult

Poor service to internal customer

to avoid in an industry wide shortage.

Establish internal user survey that links
service providers pay to performance

Difficulty in controlling costs

Hire a third party to audit service

provider, compare rates with other like
companies

Outsourcing relationship
Limited scope suppliers are less unique easy to replace, full service suppliers provide unique
value and are therefore more closely integrated.
Limited scope suppliers

Arms-length
Niche provider

Full service suppliers

Hybrid
Solution integrator

In Hameedia falling under niche provider because,

Providers are generally specialized, providing a very specific limited services. E.g.
marketing team and logistic department

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Mohamed Rismy
Number: M00476686

Student

May be more difficult to than arms-length suppliers due to their specialized nature. Our
Marketing team has unique skills their techniques also different so cannot suddenly

switch into another team because they are specialized people.

In general, these are specialized, non-recurring purchases.

Supply chain strategy

Supply chain is important to an organization. When doing international businesses it is more
important to grab the host market. In Maldivian market there are lots of international suppliers
giving the goods local company. In here we want to handle customers very carefully because the
perceptions of customer will vary. For example if Maldivian customers used Italian brand or UK
brand it is very difficult to switch to another brand. But here Maldivian like to use quality brands
but they mostly used Asian brand goods because Hameedia raw material suppliers are mostly
from China and finishing goods are made in Sri Lanka. Hameedia always provide high quality
goods for their customers it products not only famous in domestic it is famous lots of country so
it will very easy to switch Maldivian perception to Hameedia.
According to this Hameedia supply chain fits with international distribution. It means
manufacturing domestically and host distribution the advantage is can create the good brand
image among customers and same quality will remain. Disadvantage is transferring cost is high
and also market knowledge is law to overcome this Hameedia use intermediarys or outsourcing
to transfer goods than it will be cost effective and also safe. To gain the market knowledge
outsourcing a marketing team in host country so marketing activities conduct through that team
so can easily market the product.
Hameedia supply chain is responsiveness focus because they purchase their raw material just in
time because they mostly prepare their products to special orders and also it get quick response
as well. Hameedia always promote pull strategy its products always have high demand.
Customers always creating demand to do innovation products to organization. This uniqueness
give the competitor edge to Hameedia thats why they lead the domestic market over the year, so
they will apply same method to hos t country as well through their marketing techniques.

Current Value Chain of the Organization.

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Mohamed Rismy
Number: M00476686

Student

It shows the principal value points of the organization in the present domestic market. It have
two major activities namely;
A Primary Activities.
B Supportive activities.
Primary activities consists of major findings such as Inbound & outbound logistics, operations,
Sales & marketing and services. According to the analysis Marketing & service shows the
positive effects & other major primary activity shows much negative effect Hameedia (Pvt) Ltd.
To create a high level of value organization must add value to the negative impacts to reach the
competitive advantage.
According to the key finding it provides a clear & positive picture about the organizations
supportive activities is almost performed well in the current scenario.
FIRM INFRASTRUCTURE

S
U
P
P
O
R
T

HUMAN RESOURCE MANAGEMENT

PROFIT
MARGIN

TECHNOLOGY DEVELOPMENT
PROCUREMENT
INBOU
ND
LOGIS
TICS

OPERA
TIONS

OUTB
OUND
LOGIS
TICS

MARKE
TING &
SALES

SERVI
CES

PRIMARY ACTIVITIES

Internationalizing the value chain.

In general organizations value chain has linkages (relationship) where one value activity shall
depend on another activitys performance .According to that the HFPL value chain has the
internal linkage within the activities which it operates currently in the domestic market.
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Mohamed Rismy
Number: M00476686

Student

With the external linkage it connects with the suppliers & customers value chain & creates a
value system in the business process. When we think on the process of globalization the firms
value chain might change as mentioned below.
In the process of internationalizing the value chain it centralized the upstream functions such as
research & development, production to home country .Also decentralized the downstream
activities such as marketing, sales & services to host countries.
HOME COUNTRY
Research &
development

Production
Marketing

Sales &
service

CENTRALIZING UPSTREAM

Host
Country

DECNTRALIZING DOWNSTREAM
FUNCTIONS

The changed value chain (V.C) shows clearly how the activities of a firm spread over its (V.C)
the characterized concerns in international, as distinguished to home market, a firm can define
two major dimensions of strategies to benefit from the scenario.

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Mohamed Rismy
Number: M00476686

Student

A Configuration- Where the each activity in the value chain performed in the international
market?
B Coordination-How each & every activity interconnected & coordinates among the
countries?
To get the maximum benefit, host & home country organization could be briefly coordinated by
using the same information system, which can be an easy way of transferring information in
between the countries, also can rescue the level of time consuming activities to provide accurate
and timely information to the decision making process.
Major Benefits:
Gain the economies of scale in the activity.
An administrative (Proprietary) learning curve will obtain.
Gain the comparative advantage, in where the specific activities are performed (For any
activity not only for production).
Ease to handle the co-locating linked activities such as R&D, production by coordination.
Even local buyers responsiveness would lead to high.
Potentially allows the allotment of know-how among discrete activities.

Conclusion
As conclusion, the international market always build the confident among the domestic market.
Hameedia is a market leader in domestic market. that experience helpful Hameedia to going

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Mohamed Rismy
Number: M00476686

Student

international. And also Maldives enter will give knowledge to Hameedia to attract South Indian
market.
This report talk about the level of internalization and develop necessary level of relationship in
the new international structure and also it is all about implementing the strategy using all
relevant theory and what I suggest in my first course work.

References

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Lecture notes
faculty.babson.edu, effects of absorption capacity, available at

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Mohamed Rismy
Number: M00476686

Student

(http://faculty.babson.edu/krollag/org_site/org_theory/march_articles/cohen_abcap.html)
Viewed on 22.04.2014

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